It’s no secret the FTSE 100 index is currently enjoying its day in the sun. But it’s quickly becoming more of an extended Indian summer, as January marked the Footsie’s seventh straight month of gains.
This was its longest monthly winning streak in over 12 years!
That’s pretty remarkable considering the volatile past few months, with on-off tariffs, the Autumn Budget uncertainty, AI bubble jitters, Venezuela, Greenland, and more.
Another impressive record is that the FTSE 100 recently jumped 1,000 points in the shortest time ever. It took just 171 days to go from 9,000 to 10,000, according to AJ Bell‘s data.
The previous record was 229 days back in the late 1990s when it went from 5,000 to 6,000.
And the positive momentum has continued into February, despite billions been wiped off the value of data companies like London Stock Exchange Group (LSE:LSEG) and RELX yesterday (3 February).
As I write, the FTSE 100 is above 10,400.
Why’s it on fire?
Last year, the blue-chip index returned 25.8%, including dividends. This was its fifth-best year since inception in 1984.
The return even beat the S&P 500, which is packed with tech titans that resemble the corporate equivalents of nation states.
What’s going on here? Well, I don’t want to rain on the Footsie’s parade, but for perspective it should be noted that 2025 was a very strong year for most major global indexes.
When compared to many of these, the FTSE 100’s return doesn’t look so spectacular.
Still, the index has benefitted from investors worried about unpredictable US government policy and highly priced S&P 500 stocks. As such, it has become a bit of a safe haven in troubled times, along with gold.
We’ve seen increased interest from foreign investors looking to diversify their holdings and the FTSE 100 has also shone during the more tumultuous periods thanks to its plethora of defensive-style companies…The UK is a rich hunting ground for dividends.
Dan Coatsworth, AJ Bell.
AI disruption fears
A regular criticism of the index is that it lacks high-growth tech firms, particularly in artificial intelligence (AI). However, this perceived Achilles heel has actually been an advantage lately, as investors have started to worry that AI might in fact be a Pandora’s Box.
That’s certainly how it feels right now for investors in London Stock Exchange Group, or LSEG. After crashing more than 10% yesterday, shares of the financial data provider are down by a shocking 40% in 12 months.
The big fear here is that AI companies like Anthropic (with its Claude product) might poach customers that currently use LSEG’s data terminals (Workspace/Refinitiv). This can’t be discounted entirely.
However, it’s worth noting that analysts at UBS think the risk is exaggerated. They point to LSEG’s data supply deals with Anthropic, OpenAI (ChatGPT), and others.
Moreover, the forward price-to-earnings multiple has collapsed to less than 16. And the forecast dividend yield’s now 2.2%, which adds weight to the investment case considering LSEG’s 15 years of consecutive dividend growth.
Of course, given the uncertainty, it would take a brave soul to pile into the stock today. But it’s worth noting that UBS just slapped a 12-month share price target of £110 on LSEG. That’s 55% higher the current price!
On this basis alone, I think it’s worth investigating further.
